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Page 4 of 8 2/(TIME PERIOD+1)=2/(10+1)=.01818=18.18%
The EMA formula works by weighting the difference between the current period's price and the previous period's EMA and adding the result to the previous
period's EMA. There are two possible outcomes: the weighted difference is either positive or negative.
If the current price (C) is higher than the previous period's EMA (P), the difference will be positive (C - P). The positive difference is weighted by multiplying it by the constant ((C - P) x K) and the answer is added to the previous period's EMA, resulting in a new EMA that is higher ((C - P) x K) + P.
If the current price is lower than the previous period's EMA, the difference will be negative (C - P). The negative difference is weighted by multiplying it by the constant ((C - P) x K) and the final result is added to the previous period's EMA, resulting in a new EMA that is lower ((C - P) x K) + P.
Bollinger Bands - The theory behind Bollinger Bands is that currency prices tend to stay within the upper and lower bands. Bollinger Bands are plotted a number of standard deviations above and below a moving average (SMA). The default values used in the software are a 20-period simple moving average and 2 standard deviations, which are commonly used values in the industry. A common use of bollinger bands when trading currencies is to sell when the price is close to the upper band and buy when the price is close to the lower band. A distinctive characteristic of Bollinger Bands is that the spacing between the bands varies with price volatility. During periods of extreme changes in foreign exchange rates (high volatility), the bands widen to become more forgiving. On the other hand, the bands become narrower during periods of low volatility, containing currency prices. Some forex traders use the band in combination with other indicators such as RSI (Relative Strength), MACD (Moving Average Convergence/Divergence), and Rate of Change, which are also available with the trading platform.
Bollinger bands are curves plotted above and below a moving average of prices using a standard deviation offset. You specify where the bands should be placed in relation to the average.
Rate of Change - A momentum oscillator in which the most recent price is divided by the oldest price. For example, to construct a 9 day rate of change oscillator, the latest closing price is divided by the close nine days ago and the result is multiplied by 100. ROC has a horizontal median called equilibrium. It is this median that tells us everything we need to know about rate of change.
The normal time frame for ROC measurement is 10 days. The ratio to build the ROC indicator is as follows:
Rate of Change = 100 (Y/Yx)
"Y" represents the most recent closing price, and Yx represents the closing price a specific number of days ago
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